Chevron: Future Dividend Aristocrat

Includes: CVX, JNJ, KO, MCD, MMM, PG, WMT, XOM
by: Avi Morris

The Dow Jones Industrials have some of the biggest quality stocks, 7 are also Dividend Aristocrats (with a minimum of 25 consecutive annual dividend increases including getting through the recent credit crisis). At a time when low yields on short term investments are common, these superior stocks with respectable yields are worth attention.


3M (NYSE:MMM).........................78.30____2.7%
Coca-Cola (NYSE:KO)................51.65____3.4%
Exxon Mobil (NYSE:XOM)............61.86____2.8%
Johnson & Johnson (NYSE:JNJ)..58.46____3.7%
McDonald's (NYSE:MCD)............69.54____3.2%
Procter & Gamble (NYSE:PG).....61.01____3.1%
Wal-Mart (NYSE:WMT)...............50.86____2.4%

Chevron (NYSE:CVX).................74.06____3.9%

Prices on June 11, 2010

One additional Dow stock is included, Chevron. Both Exxon & Chevron have very long track records as descendents of Standard Oil broken up 100 years ago by the Supreme Court. While not yet a member of this elite group, Chevron should join shortly. It had a lackluster dividend record until 1988 when it started increasing dividends on a regular basis. In just a few years, additional annual dividend increases will qualify it as a Dividend Aristocrat. Because of the disaster in the Gulf from the oil spill, all oil related companies are under pressure and will probably have to wait many months before attracting greater investor interest. But growing global demand for oil and gas, especially from China & India, will keep these two companies Dividend Aristocrats for many years.

Track records for Dividend Aristocrat stocks in this decade have been ordinary which can be viewed as a plus or minus. The stocks had subdued growth but also limited declines during the financial meltdown followed by restrained recoveries.

The companies have good business models which made them successful and they have expanded worldwide. U.S. markets, to various degrees, are mature and European markets (especially western Europe) are similar to a lesser degree. Much of future growth will come from new markets in Latin America, eastern Europe and particularly Asia. These companies are aggressively expanding in high growth regions. In uncertain times with low yields, these quality stocks deserve consideration.

Disclosure: Long KO